Opinion
G058742
10-25-2022
In re Marriage of LEONARD M. and ALISA MALO. v. ALISA MALO, Appellant. LEONARD M. MALO, Respondent,
Alisa Malo, in pro. per.; Beatrice L. Snider and John L. Rowmaker for Appellant. Law Offices of Marjorie G. Fuller and Marjorie G. Fuller; Seastrom Seastrom &Murphy and Brian G. Seastrom for Respondent.
NOT TO BE PUBLISHED
Appeal from postjudgment orders of the Superior Court of Orange County No. 16D001973, Scott B. Cooper, Judge. Affirmed.
Alisa Malo, in pro. per.; Beatrice L. Snider and John L. Rowmaker for Appellant.
Law Offices of Marjorie G. Fuller and Marjorie G. Fuller; Seastrom Seastrom &Murphy and Brian G. Seastrom for Respondent.
OPINION
O'LEARY, P. J.
This is an appeal by Alisa Malo from an order denying her request to increase the spousal support paid by her ex-husband, Leonard Malo. She raises two principal issues on appeal.
For ease of reference and to avoid confusion, we will refer to the parties by their first name. No disrespect is intended.
First, Alisa claims that Leonard owes her arrears. Specifically, the original support award contains an Ostler/Smith component of 20 percent of "any gross income" Leonard earns above his base salary. Alisa claims that Leonard earned income from a rental property and did not pay her pursuant to the Ostler/Smith order. On appeal, she contends the court erred by misinterpreting the original order as applying solely to employment income (i.e. bonuses). We agree with Alisa that the court misinterpreted the judgment. However, even under the proper interpretation of the judgment, the court's finding that the rental properties operated at a loss, which finding Alisa does not challenge, renders the error harmless in that there was no income from the rental properties.
See In re Marriage of Ostler & Smith (1990) 223 Cal.App.3d 33.
Second, Alisa claims the trial court erred by imputing income to her. However, her arguments largely ignore the substantial evidence standard of review. Leonard presented the testimony of a vocational expert who opined that Alisa was capable of earning at least $4,000 per month, which is what the court imputed to her. That finding was supported by substantial evidence.
Additionally, Alisa contends the court erred by concluding there was no domestic violence that inhibited her ability to work, and by concluding Leonard did not have sufficient assets to contribute to her attorney fees. Both of those findings were supported by substantial evidence as well.
Accordingly, we affirm.
FACTS
"The parties were married on March 17, 2006. Leonard petitioned for dissolution of the marriage on March 7, 2016. The parties ultimately stipulated that the date of separation was February 15, 2016, resulting in a marriage of approximately nine years and 11 months." (In re Marriage of Malo (June 8, 2020, G055947) [nonpub. opn.] (Malo I).) "The court entered a status only judgment of dissolution in December 2016. Shortly afterward, the parties stipulated to the appointment of retired Commissioner David S. Weinberg as a privately-retained temporary judge in the matter." (Ibid.)
The first contested hearing occurred in May and June 2017 and concerned the issues of custody of their child as well as a five-year domestic violence restraining order sought by Alisa. "The court ultimately awarded the parties joint physical and legal custody and denied the request for the restraining order. It found that Leonard had committed domestic violence through verbal and emotional abuse, but not physical abuse. It found that the parties['] marriage - on both sides - was hamstrung by abuse of alcohol and marijuana, and that Leonard's domestic violence was fueled by intoxication. However, in the 14 months since separating, both parties had consistently tested clean for drugs and alcohol, and there were apparently no further instances of emotional abuse. Based on that evidence and the Evidence Code section 730 evaluation, the court concluded a restraining order was unnecessary." (Malo I, supra, G055947.) Alisa did not appeal from that judgment. (Ibid.)
In September 2017, the parties entered into a stipulated judgment for the division of all of their community property. Alisa did not appeal from this judgment.
What remained for trial were the issues of child and spousal support and attorney fees and costs. (Malo I, supra, G055947.) A trial was subsequently held, and in December 2017, the court entered a judgment ordering Leonard to pay $720 per month prospectively in child support, and $1,250 per month in spousal support. (Ibid.) The court included an Ostler/Smith component in the spousal support award that required Leonard to additionally pay 20 percent "of any gross income he receives in excess of his base salary," not to exceed $42,000 per year. The court found that any domestic violence that occurred during the marriage had no influence on Alisa's ability to work. (Malo I, supra, G055947.) The court ordered the parties to "bear their own fees and costs, finding neither had the means to contribute to the other." (Ibid.) Alisa appealed.
In Malo I, supra, G055947, we affirmed the judgment. As relevant here, we held that the finding that Leonard's domestic violence was emotional and not physical was final in that it was part of a judgment that Alisa did not appeal. (Ibid.) We further held that Alisa failed to point to any evidence in the record that the emotional abuse hindered her ability to work. (Ibid.)
In June 2018, Alisa filed a request for order (RFO) modifying spousal and child support based primarily on the changed circumstance of her not having worked since October 2017. Alisa claimed to be on various government assistance programs as a result of her lack of income. Alisa also claimed Leonard had failed to abide by the Ostler/Smith component of the support award in that Leonard earned $1,900 per month in rental income above his base salary and he had not made any Ostler/Smith payments.
Alisa had apparently sought the assistance of the Department of Child Support Services (DCSS) in enforcing the child support order. Pursuant to Family Code section 4251, subdivision (a), the child support component of her RFO was thus transferred to a DCSS commissioner under a separate proceeding. Accordingly, the court below addressed only spousal support, and this appeal is so limited as well.
All statutory references are to the Family Code unless stated otherwise.
Leonard requested that Alisa be compelled to submit to a vocational evaluation, which the trial court granted.
After three days of evidentiary hearings, the trial court denied Alisa's request to modify spousal support. The court imputed income to Alisa in the amount of $4,000, which was approximately the same as the $4,083 of actual income the existing order was based on, and thus the court found no material change of circumstances. The court relied on the testimony of the vocational expert who had identified 26 job opportunities for Alisa. The court found Alisa's testimony incredible that she had contacted each employer and had not been offered a job. The court also found that Alisa had "not presented evidence that her alleged inability to work has been caused by domestic violence on the part of [Leonard]."
With regard to Alisa's claim to Leonard's rental income under the Ostler/Smith provision, the trial court held that Leonard did not have any "income" from the rentals because his expenses exceeded the rental income. Further, the court interpreted the "'any gross income'" language in the Ostler/Smith order as referring to employment income, not rental income. "The Court reaches this conclusion based on a reading of the orders in context of the judgment, and the history of income available to [Leonard] at the time the order was made. The Court finds that the intention of the order was to capture bonus employment income to which [Leonard] may be eligible, and may or may not receive."
The trial court initially referred the question of whether "'any gross income'" is limited to employment income to the commissioner who issued the original support judgment. In the end, the court decided to interpret the judgment without consideration of the commissioner's expressed intent. Because the court did not consider the commissioner's input, we need not address Alisa's claim that it was error to refer the matter to the commissioner. That alleged error was necessarily harmless.
Finally, with regard to attorney fees and costs, the trial court found that Leonard did not have sufficient assets to contribute toward Alisa's attorney fees. Alisa appealed.
We granted Alisa's unopposed motion to consolidate case No. G058742 with case No. G059368.
DISCUSSION
Alisa raises several issues on appeal, but they essentially boil down to two categories. First, she contends the trial court erred by failing to award her arrears, which she claims she is entitled to based on her interpretation of the Ostler/Smith component in the original judgment. Second, she levels three substantial evidence challenges. She claims the evidence did not support the court's finding of imputed income to her. She claims the evidence compelled a finding that ongoing domestic violence inhibited her ability to work. And she claims the evidence compelled the court to issue an award of attorney fees to her. We begin with the issue of arrears.
I. Leonard Did Not Owe Arrears
Alisa's argument on arrears focuses on alleged income Leonard earned from a rental property. There does not seem to be any dispute that Leonard 's expenses generated by the rental property exceeded his income. However, Alisa argues the expenses are irrelevant because the Ostler/Smith component of the support award applies to "any gross income." In her view, gross income means any monetary receipts irrespective of expenses. The trial court rejected her argument on two grounds: (1) that income from rental property must be interpreted to be net of expenses, and (2) the Oster/Smith component of the support award applied only to employment income.
We interpret the support order de novo. (In re Marriage of Davis (2004) 120 Cal.App.4th 1007, 1015, 1018-1019.) We conclude the trial court erred by interpreting the Ostler/Smith order as applying only to employment income, but we agree with the proposition that rental income must be calculated net of expenses. Since the trial court found the expenses exceeded the income, we ultimately conclude the court did not err by refusing to award arrears.
We disagree with the trial court's interpretation limiting the Ostler/Smith order to employment income for two reasons.
First, the Ostler/Smith order has no such limitation on its face. The order applies to "any gross income he receives in excess of his base salary." Leonard contends the reference to his "base salary" indicates an intent to limit the order to employment income. But the reference to the base salary is simply a reference to the base support award, which was calculated based on Leonard 's regular salary. The Ostler/Smith component applies to "any gross income," not just employment income. (Italics added.)
Our second reason for disagreeing with the trial court's interpretation is that the term "gross income" does not exist in a vacuum; there is an entire Family Code statute dedicated to defining that term. Section 4058 defines annual gross income as including income "from whatever source derived," including "rents." (Id., subd. (a)(1).) The judgment presumably used the term "gross income" consistent with this statute. Thus gross income includes rents. Accordingly, the court erred by interpreting the Ostler/Smith order as including only employment income.
However, we do not interpret "gross income" as excluding consideration of expenses. Indeed, section 4058 defines gross income as including "[i]ncome from the proprietorship of a business, such as gross receipts from the business reduced by expenditures required for the operation of the business." (Id., subd. (a)(2).) As this definition illustrates, "gross income" does not necessarily mean income irrespective of expenses. Indeed, the operation of rental properties is much like the operation of a business. As the trial court reasoned, Alisa's approach "is not an accurate calculation of 'income' associated with a rental property, which necessarily requires expenses to generate the rental revenues. Those expenses must be considered with calculating the income generated by the property." We agree with that. If we were to interpret the judgment as assessing a 20 percent surcharge on rental receipts, irrespective of expenses, we could well render an otherwise profitable rental property unprofitable, essentially compelling Leonard to sell the property. That would serve no purpose at all and would be of no benefit to either party.
Instead, we interpret "gross income" to be consistent with the Family Code definitions of "gross income" (§ 4058) and "net disposable income" (§ 4059). Section 4059 defines net income as income after deducting taxes, insurance expenses, union dues, child or spousal support payments, job-related expenses, and a discretionary hardship allowance. For purposes of the Ostler/Smith order, the most relevant deduction is taxes. Essentially, therefore, the term "gross income" in the Ostler/Smith order means pre-tax income. Rental properties that do not add to Leonard's pre-tax income do not count as "gross income" under the Ostler/Smith order.
Here, the trial court found the evidence established that Leonard's rental properties were running at a loss. Leonard testified he reported a loss on the rental property on his tax returns. Alisa does not challenge that factual finding on appeal. Accordingly, in light of our interpretation of the judgment, the court correctly refused to award arrears for rental income.
At oral argument, Alisa raised the additional issue that the trial court should have considered the proceeds Leonard received through the sale of certain LLCs in calculating Leonard's ability to pay support. So far as we can tell from the record, Alisa received an equal share of the proceeds from the sale of those LLCs. In any event, her argument was not properly raised in the briefs. Alisa's opening brief contains only a single sentence that references an unspecified capital gain of $42,000. A single sentence is not enough to preserve an issue for appeal. (See Winslett v. 1811 27th Avenue, LLC (2018) 26 Cal.App.5th 239, 248 fn. 6 ["Arguments not raised by a separate heading in an opening brief will be deemed waived"]; Cal. Rules of Court, rule 8.204(a)(1)(B).)
II. Substantial Evidence Supported the Court's Imputation of Income
Alisa also challenges the trial court's calculation of her actual income. However, the court explicitly relied on imputed income in denying her RFO, not actual income, and thus any error in calculating actual income was necessarily harmless.
Next, Alisa contends the trial court erred in finding there was no material change of circumstances to support a modification of spousal support, which was, in turn, based on its finding that Alisa was capable of earning $4,000 per month. "A spousal support order is modifiable only upon a material change of circumstances since the last order. 'Change of circumstances' means a reduction or increase in the supporting spouse's ability to pay and/or an increase or decrease in the supported spouse's needs." (In re Marriage of West (2007) 152 Cal.App.4th 240, 246.) "'Absent a change of circumstances, a motion for modification is nothing more than an impermissible collateral attack on a prior final order.'" (In re Marriage of Khera & Sameer (2012) 206 Cal.App.4th 1467, 1479.) "The modification of a spousal support order is reviewed on appeal for abuse of discretion. In exercising its discretion the trial court must follow established legal principles and base its findings on substantial evidence." (In re Marriage of Schmir (2005) 134 Cal.App.4th 43, 47.)
The trial court concluded there was no change of circumstances because Alisa, though not actually earning the $4,083 per month she had at the time of the original support order, still had the capability of earning that amount. Thus the court imputed income to her of $4,000 per month, which was not a material change in circumstances.
In order to properly impute income to a party, there must be a showing that the party has both the ability and the opportunity to work. "The 'opportunity to work' exists when there is substantial evidence of a reasonable 'likelihood that a party could, with reasonable effort, apply his or her education, skills and training to produce income.'" (In re Marriage of Smith (2001) 90 Cal.App.4th 74, 82.)
In finding Alisa had the ability to earn $4,000 per month, the trial court relied principally on the testimony and report of a vocational expert. Based on Alisa's extensive work experience in the entertainment industry, the expert opined that Alisa was suited to working in three categories of jobs: talent executive, talent recruiter, and higher-level office support, administrative assistant, or higher-level customer service. The expert opined that the average salary for each of these categories would exceed $4,000 per month. The vocational expert based his opinion, in part, on 26 specific employment opportunities he found and believed to be suitable for Alisa. Alisa was asked about these opportunities in her testimony at the hearing. She generally testified that she contacted all 26 and did not receive any job offers, and that many of them were either too distant or too different from her job experience to be viable opportunities. However, the court found her testimony lacked credibility: "Having listened and watched as [Alisa] testified in this regard, the Court finds it difficult to accept her testimony as entirely credible. The Court finds it likely that [Alisa] contacted some, perhaps most, of the prospective employers, but her hesitant and vague testimony as to others left this Court skeptical that she contacted them all as she testified."
After testifying about several of the 26 opportunities, in order to save time, Leonard stipulated to an offer of proof that she would testify to having contacted all 26 without success.
Alisa challenges these findings, contending that the jobs the expert proffered were either outside her expertise or too far from her home. She challenges the court's credibility finding on the ground that "[h]esitation or vague-ness is in no way evidence against Alisa's credibility, especially when there was no evidence of Alisa not being credible in any other way."
Alisa's arguments evince a lack of understanding of the role of this Court of Appeal. When we review the evidence to support a ruling, we do not weigh the evidence at all. That is the trial court's role. The only question before us is whether there was substantial evidence to support the court's ruling. While there have been many efforts over the years at defining what sort of evidence counts as substantial (see Roddenberry v. Roddenberry (1996) 44 Cal.App.4th 634, 651-652), the essence of it is this: evidence is substantial if, in light of the whole record, any reasonable person could find the evidence credible and reach a factual conclusion from it. While that is not a trivial test from a respondent's standpoint (id. at p. 652), it has been described as a "'daunting task'" for appellants because it affords the fact finder wide latitude to draw factual conclusions from the evidence. (Dreamweaver Andalusians, LLC v. Prudential Ins. Co. of America (2015) 234 Cal.App.4th 1168, 1171.) Reasonable people can disagree about a lot of facts, and it is not this court's role to decide among those factual disagreements. We simply set the outer boundaries of those disagreements.
Additionally, we do not revisit credibility findings that are based on the affect or demeanor of the witness at the hearing. (People v. Flores (2020) 9 Cal.5th 371, 386, fn. 1 ["The Supreme Court has long emphasized deference to a trial court's 'determinations of demeanor and credibility'"].) Indeed, it is precisely the trial judge's advantage of observing the witness's demeanor that compels us to defer to the trial court on issues of credibility. It is not this court's proper function to second-guess the trial court's credibility determinations. (In re A.S. (2018) 28 Cal.App.5th 131, 149.) "We review a cold record and, unlike a trial court, have no opportunity to observe the appearance and demeanor of the witnesses." (In re Sheila B. (1993) 19 Cal.App.4th 187, 199.)
Given our limited role in resolving factual disputes, we must reject Alisa's arguments. The testimony of the vocational expert is substantial evidence that supports the court's ruling. There was nothing irrational about that testimony. And the trial court's credibility determination was easily within its discretion.
III. The Evidence Did Not Compel a Finding Leonard Committed Postjudgment Domestic Violence
Alisa contends her ability to work was affected by ongoing domestic violence by Leonard. The trial court rejected this claim, concluding, "[Alisa] has not presented evidence that her alleged inability to work has been caused by domestic violence on the part of [Leonard]." Alisa claims this was an "abuse of discretion."
The history of this case is that the trial court found in 2017 that Leonard had committed emotional domestic violence on Alisa. As we explained in our prior opinion, the court "found that Leonard had committed domestic violence through verbal and emotional abuse, but not physical abuse. It found that the parties['] marriage - on both sides - was hamstrung by abuse of alcohol and marijuana, and that Leonard's domestic violence was fueled by intoxication. However, in the 14 months since separating, both parties had consistently tested clean for drugs and alcohol, and there were apparently no further instances of emotional abuse." (Malo I, supra, G055947.) In the subsequent trial on spousal support, Alisa claimed her ability to work was affected by the domestic violence, but the court found otherwise, and we affirmed that finding.
In the present proceeding, Alisa claimed Leonard was continuing to perpetrate domestic violence. However, her only evidence was her testimony that a belligerent process server (not Leonard) had harassed her, and she claimed Leonard had not cooperated in returning personal property to her.
The trial court concluded these incidents did not have any impact on Alisa's ability to work. Alisa contends this was an abuse of discretion but offers no coherent argument as to why. There is nothing about the incidents she described that would compel a court to find they constituted domestic violence that hindered her ability to work.
IV. The Trial Court Did Not Abuse Its Discretion In Denying Attorney Fees
Alisa contends the trial court was compelled to award her attorney fees. Section 2030, subdivision (a)(2), provides, "When a request for attorney's fees and costs is made, the court shall make findings on whether an award of attorney's fees and costs under this section is appropriate, whether there is a disparity in access to funds to retain counsel, and whether one party is able to pay for legal representation of both parties. If the findings demonstrate disparity in access and ability to pay, the court shall make an order awarding attorney's fees and costs." The trial court concluded Leonard did not have sufficient liquid assets to pay Alisa's attorney fees.
"[A] motion for attorney fees and costs in a dissolution proceeding is left to the sound discretion of the trial court. [Citations.] In the absence of a clear showing of abuse, its determination will not be disturbed on appeal. [Citations.] '[T]he trial court's order will be overturned only if, considering all the evidence viewed most favorably in support of its order, no judge could reasonably make the order made. '" (In re Marriage of Sullivan (1984) 37 Cal.3d 762, 768-769.)
The evidence supports the trial court's ruling. According to Leonard's income and expense declaration, he had an average pre-tax monthly income of $14,700, and ongoing monthly expenses of $12,544. He paid approximately $5,000 per month in debt payments. He had only $1,708 in liquid assets. His total amount of debt was approximately $580,000. He had paid his own attorneys using credit cards and loans. Alisa does not really have any response to this evidence other than to emphasize how much his monthly income is compared to hers and to disparage some of those loans as being from his father's company. However, he testified he pays those loans monthly and his father's company has a lien on one of his properties to secure the loan. Based on this evidence, the court could credit those loans as a legitimate limitation on his ability to contribute to Alisa's attorney fees. On the whole, the evidence supports the court's conclusion that Leonard did not have available assets to contribute to Alisa's attorney fees. There was no abuse of discretion.
DISPOSITION
The postjudgment order is affirmed. Respondent shall recover his costs on appeal.
WE CONCUR: GOETHALS, J., MOTOIKE, J.